LSE trades to be cleared by EuroCCP

Cash equity trades executed on the London Stock Exchange
(LSE) will soon be cleared on EuroCCP as well as existing clearers SIX x-clear
and LSE-owned LCH.Clearnet.

EuroCCP is the largest equities central counterparty (CCP) in
Europe, clearing for 14 trading venues across the region. Last month, EuroCCP
became the first CCP to be authorised under the European market infrastructure
regulation.

The deal is subject to regulatory approvals and finalisation
of legal, connectivity and operational arrangements, but an interoperability
framework is already in place between EuroCCP, SIX x-clear and LCH.Clearnet.

Once live, firms
using EuroCCP to clear UK equities trades executed on Aquis, BATS Chi-X,
Equiduct, GETMatched, Goldman Sachs’ Sigma-X, SmartPool, Turquoise and UBS MTF
will be able to save at least 50% on settlement costs by directing LSE trades
to EuroCCP, the clearing house said. Through cross-platform netting by EuroCCP,
all trades in the same UK stock, regardless of where they are executed, can be
netted with LSE trades into a single settlement obligation.

“Many market
participants have been waiting to have more choice in where they clear trades
executed on London Stock Exchange. The addition of EuroCCP to the central
counterparties already available will bring the benefits of more competition
together with reduced costs,” said Diana Chan, CEO of EuroCCP.

Cross-platform
netting of UK equities by CCPs has been possible since 2013 for trades executed
on multilateral trading facilities and it is expected that LSE trades can also
be cross-platform netted starting in Q3 2014.

EuroCCP was formed
by the merger of Netherlands-based European Multilateral Clearing Facility and
UK-headquartered European Central Counterparty. The company is equally owned by
BATS Chi-x Europe, NASDAQ OMX, ABN AMRO Clearing Bank and The Depository Trust
& Clearing Corporation.